Valero tender offer oversubscribed by early date; cap $1.25 billion

By Marisa Wong

Los Angeles, Sept. 12 – Valero Energy Corp. announced the early results of its Aug. 26 tender offers to purchase for cash up to a maximum aggregate principal amount of notes from 11 series, subject to acceptance priority levels and series tender caps.

Valero also increased the maximum aggregate principal amount for the offers to $1.25 billion from $1 billion, according to a Monday press release.

The company plans to accept for purchase the following notes tendered as of 5 p.m. ET on Sept. 9, the early tender date, listed in order of acceptance priority level:

• All $48,439,000 tendered of the $252,075,000 outstanding 3.65% senior notes due 2025 (Cusip: 91913YAS9), with pricing based on the 3.125% U.S. Treasury due Aug. 15, 2025 plus a fixed a spread of 55 basis points;

• All $290,658,000 tendered of the $542,869,000 outstanding 2.85% senior notes due 2025 (Cusip: 91913YAY6), with pricing based on the 3.125% U.S. Treasury due Aug. 15, 2025 plus a fixed a spread of 55 bps;

• All $166,465,000 tendered of the $597,411,000 outstanding 3.4% senior notes due 2026 (Cusip: 91913YAU4), with pricing based on the 3.125% U.S. Treasury due Aug. 31, 2027 plus a fixed a spread of 70 bps;

• All $61,663,000 tendered of the $207,672,000 outstanding 4.375% senior notes due 2026 (Cusip: 91914JAA0) issued by Valero Energy Partners LP and guaranteed by Valero, with pricing based on the 3.125% U.S. Treasury due Aug. 31, 2027 plus a fixed a spread of 90 bps;

• All $551,726,000 tendered of the $1 billion outstanding 4% senior notes due 2029 (Cusip: 91913YAW0), with pricing based on the 2.75% U.S. Treasury due Aug. 15, 2032 plus a fixed a spread of 140 bps; and

• $131,049,000 of the $415.43 million tendered of the $750 million outstanding 4.35% senior notes due 2028 (Cusip: 91913YAV2), with pricing based on the 3.125% U.S. Treasury due Aug. 31, 2027 plus a fixed a spread of 110 bps. The notes will be accepted with a proration factor of about 31.7%.

Because the offers were oversubscribed as of the early tender date, the company does not expect to accept for purchase any notes from the remaining five series, which have a lower acceptance priority than the six series above.

The other five series included the following:

• $500 million outstanding 4.5% senior notes due 2028 (Cusip: 91914JAB8) issued by Valero Energy Partners and guaranteed by Valero, with pricing based on the 3.125% U.S. Treasury due Aug. 31, 2027 plus a fixed spread of 110 bps;

• $600 million outstanding 2.15% senior notes due 2027 (Cusip: 91913YBB5), with pricing based on the 3.125% U.S. Treasury due Aug. 31, 2027 plus a fixed spread of 105 bps;

• $1.5 billion outstanding 6.625% senior notes due 2037 (Cusip: 91913YAL4), subject to a $150 million series tender cap, with pricing based on the 2.75% U.S. Treasury due Aug. 15, 2032 plus a fixed spread of 235 bps;

• $650 million outstanding 4.9% senior notes due 2045 (Cusip: 91913YAT7), with pricing based on the 3.375% U.S. Treasury due Aug. 15, 2042 plus a fixed spread of 185 bps; and

• $750 million outstanding 7.5% senior notes due 2032 (Cusip: 91913YAE0), subject to a $100 million series tender cap, with pricing based on the 2.75% U.S. Treasury due Aug. 15, 2032 plus a fixed spread of 205 bps.

Pricing was to be calculated at 10 a.m. ET on Sept. 12.

The total consideration includes an early tender payment of $30 per $1,000 principal amount of notes tendered by the early tender date.

Holders tendering after the early tender date will not be eligible to receive the early tender payment.

The company will also pay accrued interest to but excluding the applicable settlement date.

The offer expires at midnight ET at the end of Sept. 23. However, because the offers have been fully subscribed as of the early tender date, holders tendering their notes after the early deadline will not have any of their notes accepted for purchase, unless Valero chooses to increase or eliminate the maximum aggregate principal amount.

Early settlement is expected to be Sept. 13, and final settlement was slated for Sept. 27.

Tenders may no longer be withdrawn.

All notes tendered at or prior to the early tender date have priority over notes tendered after the early deadline, regardless of the acceptance priority levels of the notes tendered later.

Valero had said it may increase, decrease or eliminate the maximum aggregate principal amount of the offer or any series tender cap at any time at its discretion.

The tender offers are subject to a number of conditions.

BofA Securities, Inc. (888 292-0070 or 980 387-3907), Citigroup Global Markets Inc. (212 723-6106 or 800 558-3745), J.P. Morgan Securities LLC (866 834-4666 or 212 834-3554) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4756) are dealer managers for the tender offers.

D.F. King & Co., Inc. (212 269-5550 for banks and brokers only or 800 334-0384 for all others; vlo@dfking.com) is the tender and information agent.

San Antonio-based Valero is an oil refinery owner and operator.

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